Packet: Resource Management Committee, 08/11/16

Resource Management
Committee
Quarterly Meeting
PUBLIC PACKET
August 11, 2016
Protecting and enhancing the value of Alaska Mental Health Trust Lands while maximizing revenues from those lands over time.
ALASKA MENTAL HEALTH TRUST AUTHORITY
RESOURCE MANAGEMENT COMMITTEE MEETING
DRAFT AGENDA
AUGUST 11, 2016
8:30 a.m. - 10:00 a.m.
Teleconference Information
Call in Number: (866) 469-3239
Meeting/Session Number: 802 539 545 #
Attendee Number: #
Call to Order (Chair Larry Norene)
Committee Members (Voting):
Laraine Derr
Paula Easley
Russ Webb
Mary Jane Michael
Carlton Smith
Jerome Selby
John Morrison, Staff
Announcements
Approval of Agenda
Approval of Minutes
a) April 14, 2016
b) May 2, 2016
1. Approval
a) Fahrenkamp Center Operating Funds Increase (Item 1)
b) FY18 Operating Budget (Item 2)
2. Executive Session will be conducted
3. Consultation
4. Updates
5. Monthly Report Questions
6. Other
7. Adjourn
ALASKA MENTAL HEALTH TRUST AUTHORITY
RESOURCE MANAGEMENT COMMITTEE MEETING
April 14, 2016
11:00 a.m.
Taken at:
3745 Community Park Loop, Suite 120
Anchorage, Alaska
OFFICIAL MINUTES
Trustees present:
Larry Norene, Chair
Carlton Smith
Laraine Derr
Russ Webb
Paula Easley
Mary Jane Michael
Trust staff present:
Jeff Jessee
Steve Williams
Miri Smith-Coolidge
Carley Lawrence
Amanda Lofgren
Kevin Buckland
Mike Baldwin
Katie Baldwin-Johnson
Carrie Predeger
Heidi Wailand
Luke Lind
Kat Roch
Valette Keller
TLO staff present:
John Morrison
Wyn Menefee
Craig Driver
Karsten Eden
Sarah Morrison
Dave Griffin
Michelle Steelman
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Others participating:
Kathy Craft; Donna Mong; Sue Wood (via telephone)
PROCEEDINGS
CHAIR NORENE calls the meeting to order. He asks for any announcements. There being
none, he asks for any changes to the agenda. There being none, he asks for a motion.
TRUSTEE MICHAEL makes a motion to approve the agenda.
TRUSTEE WEBB seconds.
There being no objection, the motion is approved.
CHAIR NORENE moves to the minutes of January 26, 2016.
TRUSTEE DERR makes a motion to approve the minutes of January 26, 2016.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
CHAIR NORENE moves to the minutes of February 26, 2016.
TRUSTEE MICHAEL makes a motion to approve the minutes of February 26, 2016.
TRUSTEE EASLEY seconds.
There being no objection, the motion is approved.
CHAIR NORENE states that there are a couple of consultations and approvals. He recognizes
Mr. Morrison.
MR. MORRISON states that there are two consultations and two approvals. He continues that
Dr. Karsten Eden will give a presentation over Icy Cape, which is one of the potential revenue
sources projects. He moves on to the first consultation, which is for some sales of parcels at the
community of Elfin Cove. He introduces Dave Griffin.
MR. GRIFFIN states that he is the Southeast area lands manager. The proposed motion is the
negotiated sale for parcels in the community of Elfin Cove. He continues that this proposed
action is to conduct a sale of six parcels, which is the entire asset of land there. He adds that the
discussions between the TLO, the board members and the community of Elfin Cove culminated
in a deal where the community would purchase all six parcels for $143,000. The sale would
provide the community with a land base while alleviating the Trust of nonperforming assets in a
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remote location. He states that CRM 1444 has an appraised value of $90,000, and the remaining
five parcels have an appraised value of $60,000, for a total of $150,000. He continues that the
five adjoining parcels at the cove are unlikely to be purchased because of the steep topography.
The TLO believes this sale is in the Trust’s best interest because long-term management and
liability costs for the remaining five parcels over an extended time frame would be more than the
reduced revenue of $7,000.
TRUSTEE MICHAEL asks if the DOT encumbrances of the property continue.
MR. GRIFFIN replies yes, those will continue.
TRUSTEE SMITH asks how the community will pay for this.
MR. GRIFFIN replies that when commercial fishing was banned at Glacier Bay National Park
some money was received to offset the costs. The community has $143,000 in their account.
CHAIR NORENE asks for any further questions.
TRUSTEE MICHAEL makes a motion that the Resource Management Committee recommends
that the Alaska Mental Health Trust Authority board of trustees concur with the negotiated land
sale of six parcels in Elfin Cove, Alaska, to the Community of Elfin Cove.
TRUSTEE EASLEY seconds.
There being no objection, the motion is approved.
MR. MORRISON states that the next consultation is for a placer lease to an individual on Fox
Creek, and recognizes Karsten Eden.
DR. EDEN states that he is the minerals section chief with a 20-year background on mineral
exploration and mine development on an international level. He continues that this consultation
is for a negotiated placer lease of Trust mineral estate with the primary term of three years for the
purpose of exploration, development and production of placer gold in Fox Creek in the Fairbanks
Mining District. He adds that Randal Powelson is a very well respected placer miner in
Fairbanks and is well equipped to conduct the proposed mining activities. He also has a very
good working relationship with various state agencies and regulated placer mines. He states that
the anticipated revenues will consist of an annual rental fee of $5,000 which can be credited
against production royalty. He continues that the estimate is about $45,000 to $50,000 a year
based on comparable numbers in the Fairbanks Mining District. He adds that there are no
unusual risks associated with the proposed activity; and no unusual or significant costs are
anticipated other than periodic site visits to check on cleanups. He states that the proposal is
consistent with the Resource Management Strategy for Trust land which was adopted in January,
2016. He continues that the action is a step forward toward generating revenues from Trust
mineral resources consistent with a key Trust land management principle of encouraging a
diversity of revenue-generating uses of Trust land. He asks for any questions.
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TRUSTEE WEBB makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees concur with the negotiated lease of
Trust mineral estate on Fox Creek for exploration and development of placer gold, as proposed.
TRUSTEE SMITH seconds.
There being no objection, the motion is approved.
CHAIR NORENE states that Dr. Karsten Eden will make a presentation on Icy Cape.
DR. EDEN states that Icy Cape is located north, northwest of Yakutat, about 75 miles and is a
huge land parcel. He goes through his presentation, explaining as he goes along. He continues
that it is about 48,000 acres in size, and roughly 25,000 acres of it contain mineral-rich sands.
He adds that the delta area is where the highest grades of heavy minerals and gold are likely to
be found. He states that there is a perfect infrastructure with a road system that goes all across
the land block. He continues that there is a landing strip, a camp, and access to a log transfer
facility, so material can be shipped in and out. He continues his presentation, explaining as he
goes along. He states that it has potential for gold, garnets, zircon and epidote. He adds that
epidote is a very rare commodity that is useful in water filtration as an active filter. If it is
available on the market, it normally is sold for $130 to $150 per metric ton. The majority of the
minerals are actually epidote. He used data from the Stoney Creek Operation in Virginia, which
is a heavy mineral producer in the US, to run a scenario for Icy Cape. The scenario is 250 tons
per hour feed capacity; the operation runs 24/7 and operates 270 days per year. That results in
$218 million gross revenue per year. He adds that this is not ore-grade material. He goes into
greater detail and states that it is critical to find the high-grade pockets, the high-grade zones. He
states that this is a request for a low-altitude airborne magnetic survey over the coastal plain in
the delta areas of Icy Cape. He continues that the project costs are estimated to be $175,000.
CHAIR NORENE asks if there would be any serious environmental issues.
DR. EDEN replies that it is just placer mining, digging sand, and using water.
TRUSTEE MICHAEL asks what percentage of the revenue will go to the Trust.
DR. EDEN replies that depends on how the deal is structured and explains in greater detail.
A short discussion ensued.
MR. MORRISON reminds the trustees that the potential mine does dovetail nicely with the
existing Icy Bay timber sale. He states that this particular parcel is the furthest exploration of a
Trust parcel to this point.
The discussion continues.
TRUSTEE EASLEY makes a motion that the Resource Management Committee recommends
that the Alaska Mental Health Trust Authority board of trustees approve the expenditure of
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principal funds for parcel research and exploration of the parcel known as Icy Cape in the
amount of $175,000 from the TADA fund code 3320. These funds do not lapse.
TRUSTEE MICHAEL seconds.
MR. BUCKLAND asks the committee to consider the source of the funding for what looks to be
a great opportunity. He states that he put an informal inquiry with the GASB, Governmental
Accounting Standards Board, on the treatment. He adds that he did not see much with regard to
an item like this, whether the cost is capitalized or expenses. He continues that the GASB
checked with FASB and concluded that it is something that they felt should be expensed. He
explains this more fully.
MR. MORRISON states that they are happy to go with whatever Mr. Buckland’s final
determination is.
MR. JESSEE recommends that the motion be amended to expense this.
A discussion ensues.
TRUSTEE WEBB makes a motion to strike the language where it states “expenditure of
principal funds,” strike the “of principal funds” and after the $175,000, strike the “from the
TADA fund 3320.
TRUSTEE MICHAEL seconds.
There being no objection, the amendment is approved.
CHAIR NORENE moves back to the motion.
There being no objection, the motion is approved.
MR. MORRISON moves on to an approval for various property budgets within this one motion.
There are at least two different sets of properties. He states that first is the Real Estate
Management Plan properties, and it is important to note that all of these are paying their own
expenditures and is not a request of money. He continues that the second is a pool of properties
that are not producing money at this point and are asking for some money. He asks Craig Driver,
the asset manager, to continue.
MR. DRIVER states that approval is being sought for the FY17 property budget for the buildings
listed in the packet. He continues that the exhibit breaks out three categories: the buildings
include the Real Estate Management Plan properties located in Tumwater, Washington; Ogden,
Utah; Austin, and San Antonio, Texas; and Anchorage, Alaska, as well as other Trust properties
in Anchorage and Fairbanks. Group Two consists of properties that generally sustain themselves
through rental income, but were not acquired for the purpose of investment income. The third
category contains the properties that are currently utilized for program-related uses, but do not
sustain themselves entirely through rental income or are earmarked for program-related uses at
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less than market rent. He states that the expense budgets were derived through review of
previous years’ budgets and forecasting of anticipated FY17 operating expenses and capital
projects. He explains all in more detail. He states that there are three motions and asks that they
be adopted.
A discussion, in great detail, ensues.
TRUSTEE SMITH makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees concur with the recommendation to
approve the incremental building expenditures totaling $5,759,700 budgeted for fiscal year 2017
to be paid by the property manager from rents and other income collected from the properties.
TRUSTEE WEBB seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees approve funding the expenditures for
the Program-Related Investment properties in the amount of $212,200 for fiscal year 2017,
which appropriation shall not lapse.
TRUSTEE MICHAEL seconds.
A discussion ensues.
TRUSTEE WEBB withdraws his motion.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is withdrawn.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees authorize the CFO to transfer the
balance of the facility maintenance account, IRIS fund 3322, the balance being $105,787, to the
Alaska Mental Health settlement income account, IRIS fund 1092, to partially fund the FY17
operating cost of the Program-Related Investment properties.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees authorize an appropriation from the
Trust Authority Development Account, TADA IRIS fund 3320, in the amount of $70,000 for
capital costs of Program-Related Investment properties for FY17. The appropriation shall not
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lapse. The CFO is authorized to transfer the full amount to a third-party property manager upon
the request of the TLO.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends that
the Alaska Mental Health Trust Authority board of trustees approve an appropriation from the
Alaska Mental Health Settlement Income Account, IRIS fund 1092, in the amount of $142,200
for operating costs of the Program-Related Investment properties for FY17 which appropriation
shall not lapse. The CFO is authorized to transfer the full amount to a third-party property
manager upon the request of the TLO.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
MR. MORRISON asks if, between now and next year, preparing for this same situation is
wanted.
CHAIR NORENE replies that he and Mr. Buckland discuss it in advance and clean up the order
of the motions.
A short discussion ensues.
CHAIR NORENE moves back to the agenda and asks for an update.
MR. MORRISON states that there are a lot of things happening at the TLO, and we are
continuing to press forward in the work with the land exchange. He explains in greater detail.
He continues that House Bill 274 has been going through the various committees and believes
that it is now scheduled for a floor vote. He moves on to the land sale and states that the winter
land sale closed out a few weeks ago. He continues that seven of 17 parcels in the land sale sold
for $640,000. He adds that the parcels sold for 4.4 percent above the appraised value, which is
the lowest on record. He states that there are a couple of issues in Wrangell on some
contaminated lands, and two of those parcels are well into the process of being cleaned up. A
third parcel is an extremely contaminated parcel, which is right next to Trust land and explains
this more fully. He moves on and talks about the Governor’s travel memo and how that was
affecting the TLO. He states that issue was solved with Chair Webb's help, with a new travel
plan procedure. He continues that the PRI position has been added and there is a request to
recruit for the PCN. He adds that he will keep the board informed. He states that a letter of
interest was received from Catholic Social Services to discuss their facility next door, and we are
exploring options with them. He continues that Brian Yackel, the project manager, has been
working with the Muni to iron out some issues and move forward with the utility improvements
at Yosemite Drive. He adds that they are about to put the invitation to bid out for utility work
with C-2 in the U-Med District.
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CHAIR NORENE asks for any questions.
A short discussion ensues.
CHAIR NORENE asks for a motion to adjourn.
TRUSTEE MICHAEL makes a motion to adjourn the meeting.
TRUSTEE WEBB seconds.
There being no objection, the meeting is adjourned.
(Resource Management Committee meeting adjourned at 12:50 p.m.)
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ALASKA MENTAL HEALTH TRUST AUTHORITY
RESOURCE MANAGEMENT COMMITTEE MEETING
May 2, 2016
10:00 a.m.
Taken at:
3745 Community Park Loop, Suite 120
Anchorage, Alaska
OFFICIAL MINUTES
Trustees present:
Larry Norene, Chair
Laraine Derr (via telephone)
Russ Webb
Paula Easley (via telephone)
Mary Jane Michael
Jerome Selby
Trust staff present:
Jeff Jessee
Steve Williams
Miri Smith-Coolidge
Kevin Buckland
TLO staff present:
John Morrison
Craig Driver
Michelle Steelman
PROCEEDINGS
CHAIR NORENE calls the Resource Management Committee meeting to order and asks for any
announcements. There being none, he states that in the agenda there are some consultations,
approvals and an executive session. He asks if the executive session is to discuss sensitive
negotiations.
MR. MORRISON replies yes.
CHAIR NORENE asks what order should be taken.
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MR. MORRISON suggests a brief introduction, then call an executive session to discuss the
particulars of the transaction.
CHAIR NORENE asks Mr. Morrison to proceed.
MR. MORRISON states his appreciation for the board’s willingness to work with staff on trying
to match process with opportunity. He continues that there are two opportunities the target
markets of Texas and Washington to help further the mission and direction given as of late to
substantially increase the income revenue of the Trust. He adds that both of these opportunities
are a bit larger than previous opportunities acquired. With that, he asks to go into executive
session.
TRUSTEE WEBB asks to make a comment. He states that his understanding of the benefit of
considering these is to generate more spendable income.
MR. MORRISON replies that based on the acquisition parameters, as well as the proposed
financing, together they would each produce well in excess of a million dollars a year of
spendable income for the Trust.
TRUSTEE WEBB makes a motion to move into executive session for the purpose of considering
two acquisitions that are of a very sensitive financial nature for the Trust.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
(Executive Session from 10:06 a.m. until 11:17 a.m.)
CHAIR NORENE moves to approvals in the agenda. He states that Item A is the Texas building
acquisitions.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees approve the action as described herein wherein
the Trust Land Office forms and manages a single-purpose entity limited liability corporation
owned in full by the Trust for the purpose of acquiring, owning, and operating the proposed
property, that being the Texas building acquisition.
TRUSTEE SELBY seconds.
There being no objection, the motion is approved.
TRUSTEE MICHAEL asks how the LLCs are named.
MR. MORRISON replies that these are numbered 1 through 3. He states that this will be TLO
TX3 Investments, LLC.
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TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees approve the proposed action to fund the newly
formed LLC with principal from the Trust Authority Development Account, fund code 3320, to
acquire the property, up to $9,500,000. This funding will include purchase price net of loan
acquired, entity formation expenses, legal review, closing, and due diligence costs as necessary
to complete the transaction, as presented.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees concur with the proposed action to complete the
financing of the proposed property.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees approve an increase to the property budget
appropriation in the amount of $2,128,725.
TRUSTEE SELBY seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees delegate to the Executive Director of the TLO the
authority to determine if it is necessary to modify or cancel this transaction.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
CHAIR NORENE states that the next item is the Washington joint venture building development
proposal.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees approve the action as described herein wherein
the Trust Land Office forms a single-purpose entity joint venture limited liability company with
Panattoni Development Company for the purpose of acquiring, owning, developing, and
operating the proposed property.
TRUSTEE SELBY seconds.
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There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees authorize the Executive Director of the TLO to
represent the Trust’s interests in the transaction by working with the development partner to
ensure a successful project, including, but not limited to, decisions about modifications to the
project plan, leasing, tenant improvements, financing, and buying out Panattoni at project
stabilization.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees approve the proposed action to fund the newly
formed LLC with principal from the Trust Development Account, fund code 3320, to complete
the proposed action, up to $11 million. This funding will include payments to be made as part of
the development process, the eventual purchase price net of loan acquired, entity formation
expenses, legal review, closing, and due diligence costs as necessary to complete the transaction,
as presented.
TRUSTEE SELBY seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees concur with the proposed action to complete the
financing and subsequent purchase or sale of the proposed property.
TRUSTEE MICHAEL seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB makes a motion that the Resource Management Committee recommends the
Alaska Mental Health Trust Board of Trustees delegate to the Executive Director of the TLO the
authority to determine if it is necessary to modify or cancel this transaction.
TRUSTEE SELBY seconds.
There being no objection, the motion is approved.
TRUSTEE WEBB states that the trustees spend a good bit of time in executive session
discussing the potential benefits and risks of each of these two transactions, including the ability
of these transactions to generate a significant amount of spendable income annually for the Trust,
makes them worthwhile and beneficial. He continues that the risks have been mitigated to the
greatest possible degree.
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CHAIR NORENE adds that it was necessary to be in executive session and thanks all for the
convenience of executive session.
TRUSTEE SELBY makes a motion to adjourn the meeting.
TRUSTEE WEBB seconds.
CHAIR NORENE adjourns the meeting.
(Resource Management Committee meeting adjourned at 11:26 a.m.)
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2600 Cordova Street, Suite 100
Anchorage, Alaska 99503
Phone: 907-269-8658
Fax: 907-269-8605
To:
From:
Date:
Re:
Fiscal Year:
Amount:
Larry Norene, Chair
Resource Management Committee
Craig Driver
8/11/2016
Fahrenkamp Center Operating Funds Increase – Item 1
2017
$32,000.00
Approval
Proposed RMC Motion:
Proposed Motion One: “The Resource Management Committee recommends that the Alaska Mental
Health Trust Authority board of trustees approve additional funding for expenditures on the
Fahrenkamp Center property in the amount of $32,000 for FY17, which appropriation shall not
lapse.”
Proposed Motion Two: “The Resource Management Committee recommends that the Alaska Mental
Health Trust Authority board of trustees instruct the CFO to transfer up to $32,000, in addition to the
previously approved funding of $212,200 for the fiscal year 2017, to the third party property manager, as
requested by the TLO, for management of the PRI properties.”
Background:
Transaction/Resource: Budgets are presented to seek approval from the Alaska Mental Health Trust
board of trustees for the expenditures necessary to operate and maintain the properties. The
proposed property expenditures are an incremental increase to previously approved expenditure
amounts. The board of trustees previously approved funding the expenditures for the PRI properties
in the amount of $212,200 for the fiscal year 2017. Due to an early termination by Family Centered
Services, Inc. (FCS) at the Fahrenkamp Center in Fairbanks, additional expenditures will be incurred
for FY17 and the budget amount for the Program Related Investment Facilities must be increased
accordingly. The operator determined they were no longer able to sustain the program or programs
provided at the facility and exercised a right to terminate as provided in the lease, which was tied to
grant funding from Department of Health and Social Services (DHSS). At the time the FY17
expenditures were approved in April, 2016, it was anticipated that FCS would continue to lease the
facility through December, 2016. The actual termination date turned out to be July 8, 2016.
Property Description/Acreage/MH Parcel(s): The Fahrenkamp Building Property is as follows:
1423 Peger Road, Fairbanks, AK, known as Fahrenkamp Center, a portion of 8.5 acres, F20213.
General Background: The Trust Land Office (TLO) has established a system to adequately plan,
manage, and report activity in the real estate portfolio. Through the use of third party professional
management services, the property information is accounted for by:
1) matching income to expenses;
2) comprehensive reporting and budgeting for each property; and
3) capital expense forecasting.
Consistency with the Resource Management Strategy: The proposal is consistent with the
“Resource Management Strategy for Trust Land” (RMS), which was adopted January 2016 in
consultation with the Trust and provides for assuring that the real estate needs of mental health
programs sponsored by the Alaska Mental Health Trust Authority are met as appropriate. In addition,
11 AAC 99.020(c)(3) cites protection and enhancement of the long-term productivity of Trust land.
Trust Land Office Recommendation: The TLO recommends that it is in the Trust’s best interest to
approve the incremental building expenditures for FY17.
Applicable Authority: AS 37.14.009(a), AS 38.05.801, 20 AAC 40.710-720 and 11 AAC 99.
Trust Authority Approval: This briefing document fulfills the approval requirements that are
applicable to the transaction.
Exhibit(s):
Exhibit 1 - Property Budget Summary
Item 1
RMC 08-11-2016
Fahrenkamp Center Operating Funds Increase
Page 2 of 2
FY17 PRI Real Estate Budget Summary
PRI Properties
Name
Assets
Fahrenkamp Center-Original Approval
Fahrenkamp Center-Additional Need
Denardo
Totals
1 - Capital Improvements
Fahrenkamp
City, State
Anchorage, AK
Fairbanks, AK
Fairbanks, AK
Fairbanks, AK
Capital
1
Improvements
Operating
10,229
64,138
32,000
67,841
174,208
Principal
Interest
Total
70,000
70,000
-
-
10,229
134,138
32,000
67,841
244,208
Roof replacement, contingency to cover potential mechanical, electrical & plumbing needs at Family Centered Services lease expiration
Item 1 - Exhibit 1 Property Budget Summary
RMC 08-11-2016
Fahrenkamp Center Operating Funds Increase
Page 1 of 1
2600 Cordova Street, Suite 100
Anchorage, Alaska 99503
Phone: 907-269-8658
Fax: 907-269-8605
To:
From:
Date:
Re:
Fiscal Year:
Amount:
Larry Norene, Chair
Resource Management Committee
Sarah Morrison
8/11/2016
FY18 Operating Budget – Item 2
2017
$4,473,600
Approval
Proposed RMC Motion:
“The Resource Management Committee recommends that the Alaska Mental Health Trust Authority board
of trustees approve the Trust Land Office operating budget for FY18 in the amount of $4,473,600.”
Background:
The Trust Land Office (TLO) seeks the recommendation of the Finance Committee for the FY18
operating budget. Please see Exhibit 1 for a breakout of the proposed line items.
Exhibit(s):
Exhibit 1 - FY18 Trust Land Office Budget Proposal
A
1
B
2
F
FY17
Original
FY17 Mgmt
Plan
FY18
Proposal
17-18 %
2,457,829
90,141
1,278,847
51,967
2,783,800
143,000
1,414,700
56,000
2,884,930
143,000
1,334,970
56,000
2,954,000
143,000
1,320,600
56,000
Total
3,878,784
4,397,500
4,418,900
4,473,600
Total
FY16 YTD
6-30-16 1
5,126,422
4,728,735
9,855,157
7 Travel
8 Services
E
FY18 Proposal*
FY16 YTD
7-26-2016 1
6 Personal Services
D
TRUST LAND OFFICE OPERATING BUDGET
2
3 *Budget numbers are rounded
4
5 Expenditures
C
2,3
9 Supplies
10 Capital Outlay
11
12
13
14 Revenue
15 Principal
16 Income
17
18
19
20
21
22
23
24
25
26
27
FY17 Mgmt
FY18 Proposal
Plan
5,038,000
4,973,000
4,209,000
4,209,900
9,247,000
9,182,900
2.4%
0.0%
-1.1%
0.0%
0.00%
1.24%
17-18 %
-1.29%
0.02%
-0.69%
FY18 TRUSTEE REQUEST:
$4,473,600
Personal Services
FY18 Merit Increase
Benefits/Other Increases
Total Increase
26,500
42,600
69,100
28
29
30
31
32 1)Not final - will change during reappropriation
33 2)FY17 Mgmt Plan includes a line item transfer from Services to Personal Services to fully fund the new PRI position
3)An OMB increment of $21,400 was added to the FY17 budget for expected health insurance cost increases that have not occurred.
34 The increment was unable to be removed. The funds will be restricted and not spent.
Item 2 - Exhibit 1 FY18 TLO Budget Proposal
RMC 08/11/2016
FY18 Operating Budget
Page 1 of 1
TLO Activities through June 30, 2016
100% of the Fiscal Year
Cat Island Timber Sale Area in Southeast Protecting and enhancing the value of Alaska Mental Health Trust Lands
while maximizing revenues from those lands over time
Highlights
 Contracts have been awarded for the summer field
An existing tenant in the ‘Promontory Point’ building in Texas signed a lease extension with a total
lease value of approximately $2.4 million.
A land use license for a coffee and quick-serve food
drive-thru to occupy a portion of the L Street parcel
in downtown Anchorage was finalized. This lease
will generate $54,000 of Income revenue over the
three-year term while preserving the ability of the
Trust to capitalize on future development opportunities.
Assets, Inc., renewed its lease of the Trust-owned
2330 Nichols Street building. This will allow continued operations for the organization in its longstanding location where it provides needs-based programs,
employment, and employment education services for
beneficiaries of the Alaska Mental Health Trust.
A utility easement was issued to Alaska Electric,
Light & Power for a project in Juneau. The easement
will generate $113,880 over its 20 year term.
An over-the-counter sale of two parcels in Moose
Pass was completed. This sale generated $173,000 of
Principal revenue.
The Matanuska Susitna Borough submitted the second payment for $99,300 (of $198,600 minimum sale
price based on $1,200/acre) for the sale of 165.5
acres of Trust land for the Port MacKenzie Rail Extension project. The final sale price will be determined based on actual acreage following an as-built
survey.
A negotiated sale for six parcels in Elfin Cove was
finalized. This sale generated $143,000 in Principal
revenue.
A revocable land use license was finalized for the use
of the Leask Cove Log Transfer Facility. The facility
will be used as a staging area for construction
equipment and materials for construction of the Shelter Cove Road. This license will generate $54,000 of
Income revenue over the 18-month term.
June 2016 TLO Monthly Report
Page 2 of 7
work at Icy Cape. Work will begin in July and will
include low-altitude aeromagnetic survey and heavy
mineral concentrate sampling.
 The TLO has been working with the US Forest Service and staff of the US Senate Energy and Natural
Resources Committee to schedule a hearing for the
newly introduced legislation the ‘Alaska Mental
Health Land Exchange Act’. A hearing will likely
not be scheduled until mid-September.
 The Cat Island timber sale is underway and selective
harvesting is being performed by helicopter. Revenues for this sale could reach $500,000.
JuneFinancialNotes

Year-to-Date revenue as of June 30, 2016:

Principal:

Income:

Total:
$5,146,422
$4,728,736
$9,875,158
 Revenue as of June 30 does not reflect final amounts
for FY16. Revenue adjustments, such as deferrals
and contracts in progress, will be completed in July
and August. Final revenue amounts will be available
after August 31.
 FY16 REMP revenue projections included an addi-
tional acquisition. Due diligence is underway for a
potential acquisition in Texas, but the sale will not be
final until early FY17 causing FY16 revenue to be
slightly under expectations.
 Timber revenue is below expectations for FY16.
Harvesting on active timber sales was put on hold
due primarily to market conditions. Revenue is likely
to rebound in FY17.
 Minerals Principal revenue is down due to the de-
cline in gold prices which affects the royalties paid
to the Trust.
 Materials Principal revenue will not meet expecta-
tions. A material sale for $300,000 with Togatthele
was planned for FY16, but did not occur and is not
expected in the future.
100% of the Fiscal Year
General Performance Measurements
As of June 30, 2016
1. Revenue Analysis:
Principal
Coal Oil & Gas
Minerals Materials Timber
Land REMP
Real Estate
Total FY15 YTD
FY16 YTD
‐
2,046,147
2,107,446
95,904
709,742
1,789,078
‐
‐
$ 6,748,317
‐
2,157,034
1,329,768
5,000
10,492
1,644,128
‐
FY16 YTD Goal
‐
1,848,000
2,000,000
309,000
255,000
1,200,000
‐
‐
$ 5,146,422 $ 5,612,000
(Under)/Over
‐
309,034
(670,232)
(304,000)
(244,508)
444,128
‐
‐
$ (465,578)
FY16 Annual Goal
‐
1,848,000
2,000,000
309,000
255,000
1,200,000
‐
‐
$ 5,612,000
% of FY16 Annual Goal
FY16 Annual Goal
264,000
416,300
535,900
‐
45,000
900,500
1,400,000
567,800
$ 4,129,500
% of FY16 Annual Goal
87%
86%
170%
‐
255%
114%
94%
137%
115%
FY16 Annual Goal
264,000
2,264,300
2,535,900
309,000
300,000
2,100,500
1,400,000
567,800
$ 9,741,500
% of FY16 Annual Goal
87%
111%
88%
2%
42%
127%
94%
137%
101%
‐
117%
66%
2%
4%
137%
‐
‐
92%
Income
Coal Oil & Gas
Minerals Materials Timber*
Land REMP
Real Estate
Total FY15 YTD
FY16 YTD
FY16 YTD Goal
(Under)/Over
209,953
1,966,592
918,536
‐
125,249
914,003
1,076,102
922,766
$ 6,133,201
228,872
357,645
912,709
‐
114,546
1,026,272
1,309,342
779,349
$ 4,728,735
264,000
416,300
535,900
‐
45,000
900,500
1,400,000
567,800
$ 4,129,500
(35,128)
(58,655)
376,809
‐
69,546
125,772
(90,658)
211,549
$ 599,235
Total Coal Oil & Gas
Minerals Materials Timber*
Land REMP
Real Estate
Total FY15 YTD
FY16 YTD
FY16 YTD Goal
(Under)/Over
209,953
4,012,739
3,025,982
95,904
834,991
2,703,081
1,076,102
922,766
$ 12,881,518
228,872
2,514,679
2,242,477
5,000
125,038
2,670,400
1,309,342
779,349
$ 9,875,158
264,000
2,264,300
2,535,900
309,000
300,000
2,100,500
1,400,000
567,800
$ 9,741,500
(35,128)
250,379
(293,423)
(304,000)
(174,962)
569,900
(90,658)
211,549
$ 133,658
*Timber Income includes receipts from a log sort yard use agreement with Sealaska Timber Corporation. The Trust is paid based on the amount
of timber to pass through the facility. This income is not derived from the harvesting of timber from Trust land and is 100% Income as opposed
to the 85/15 split that is typical from harvest-based revenue.
June
May2016
2012TLO
TLOMonthly
MonthlyReport
Report
Page 3 ofPage
7
5 of 6
100
92%
% of the Fiscal Year
Real Estate Management Plan Monthly Report
Cash Flow by Month ‐ Real Estate Investment Portfolio
1.50%
351,420 302,157 $400,000
363,626 323,707 311,565 299,365 $350,000
$300,000
246,083 246,183 1.00%
338,531 181,383 $250,000
191,816 182,801 $200,000
$150,000
0.50%
$100,000
$50,000
$‐
0.00%
Jul‐15
Aug‐15 Sep‐15 Oct‐15 Nov‐15 Dec‐15 Jan‐16 Feb‐16 Mar‐16 Apr‐16 May‐16 Jun‐16
Operating Cash Flow
Month Jul‐15
Aug‐15
Monthly Return on Principal as %
Portfolio Performance by Month
Monthly Trust Principal Operating Return on 12 Month Investment
Cash Flow
Principal as % Trailing Return
0
0,0
302,157 1.34% 0
22,518,745
11.94%
0
1,5
246,183 1.09% 0
22,518,745
11.38%
Sep‐15
29,433,258
2
299,365 1,5
1.02% 0
11.12%
Oct‐15
29,433,258
0
181,383 1,5
0.62% 0
10.54%
Nov‐15
29,433,258
0
191,816 1,5
0.65% 0
10.48%
29,433,258
0
351,420 1,3
1.19% 0
11.00%
246,083 3,0
0.84% 0
10.98%
338,531 0,0
1.15% 0
11.35%
Dec‐15
29,433,258 0
29,433,258 0
29,433,258 0
323,707 0,0
1.10% 0
11.53%
Apr‐16
29,433,258 0
182,801 4,0
0.62% 0
11.59%
May‐16
29,433,258 0
363,626 5,0
1.24% 0
12.00%
Jun‐16
29,719,258 0
311,565 5,0
1.05% 0
11.91%
Jan‐16
Feb‐16
Mar‐16
1)
2)
3)
4)
Cash flow for August through December has been revised
to more accurately capture lender escrow accounts for
operating activities.
Principal investment increased in September due to the
acquisition of the North Park Corporate Center in San Antonio, TX.
Cash flow was higher in December and lower in January
due to $44,250 of prepaid rents for Northpark.
Cash flow was lower in April due to $94,100 of real estate
taxes paid for 1111 Israel Road.
Cash Flow by Property Type
12‐Month Average $ 278,220
12‐Month Total $ 3,338,636
Office
3,218,817 Inception to Date $ 9,395,020
Portfolio Value
Asset Basis 68,086,845
Asset Appreciation/(Depreciation) 1,425,956
Current Asset Value
69,512,801
Equity
33,969,922 48.87%
Debt
35,542,879 51.13%
June
May2016
2012TLO
TLOMonthly
MonthlyReport
Report
Page 4 of Page
7
5 of 6
6,176,204 Light
Industrial
100%
92% of the Fiscal Year
FY16 YTD Revenue vs. FY16 YTD Revenue Goal
As of June 30, 2016
$10,000,000
$3,000,000
$9,000,000
$2,500,000
$8,000,000
$7,000,000
$2,000,000
$6,000,000
$5,000,000
$1,500,000
$4,000,000
$1,000,000
$3,000,000
$2,000,000
$500,000
$1,000,000
$‐
$‐
Coal
Oil & Gas
Minerals
Materials
Timber
Actual YTD
Land
REMP
Real Estate
Total
Goal YTD
FY16 YTD Revenue - Principal and Income
As of June 30, 2016
$3,000,000
$10,000,000
$9,000,000
$2,500,000
$8,000,000
$7,000,000
$2,000,000
$6,000,000
$5,000,000
$1,500,000
$4,000,000
$1,000,000
$3,000,000
$2,000,000
$500,000
$1,000,000
$‐
$‐
Coal
Oil & Gas
Minerals
Materials
Timber
Principal
May 2016
2012 TLO
TLO Monthly
Monthly Report
Report
June
Land
REMP
Real Estate
Total
Income
3 of 6
Page 5 of Page
7
92% of
of the
the Fiscal
Fiscal Year
Year
100%
Revenue as of June 2016
Fiscal Year to Date – Principal and Income
FY2014 - FY2016
$14,000,000
Total Revenue
$12,000,000
$5,000,000
$10,000,000
$8,000,000
$4,500,000
$6,000,000
$4,000,000
$4,000,000
$2,000,000
$3,500,000
$‐
14
15
16
$3,000,000
$2,500,000
$2,000,000
$1,500,000
$1,000,000
$500,000
$‐
14 15 16
Coal
14 15 16
14 15 16
14 15 16
14 15 16
Oil & Gas
Minerals
Materials
Timber
Income
14 15 16
Land
14 15 16
REMP
14 15 16
Real Estate*
Principal
*Real Estate was not reported separately in FY14.
June
May2016
2012TLO
TLOMonthly
MonthlyReport
Report Page 6 of 7Page 4 of 6
100%
92% of the Fiscal Year
General Performance Measurements
As of June 30, 2016
2. Operating Budget:
Original
Appropriation
AR 37169
Personnel
2,735,300
Travel
Services
Commodities
Current
Appropriation
(180,200)
Expended
Balance
% Expended
2,555,100
2,457,829
97,271
96%
143,700
-
143,700
88,985
54,715
62%
1,386,900
30,200
1,417,100
825,273
591,827
58%
56,000
-
56,000
52,707
3,293
94%
-
150,000
4,321,900
-
Capital Outlay*
Total $
Line Item
Transfer
150,000
$
4,321,900
$
3,424,794
$
150,000
NA
897,106
79%
*Funds were transferred for due diligence requirements for potential acquisition, but funds from the operating budget will not be necessary. A TADA appropriation has been established for this purpose.
3. Capital Funds
Budget
Trust Land Exchange
% Complete
Encumbered
Expended
Unobligated
Balance
%
Expended
3,005,000
25%
258,423
102,872
2,643,704
3%
C2 Utility Extension
615,000
30%
34,070
37,540
543,390
6%
Yosemite Utility Extension
997,971
5%
13,773
48,113
936,084
5%
4,123,179
4%
Total $
4,617,971
June
May2016
2012TLO
TLOMonthly
MonthlyReport
Report
$
306,267
Page 7 of Page
7
6 of 6
$
188,526
$
100%
92% of the Fiscal Year